Valdez v. United States Secretary of the Treasury , 28 Ct. Int'l Trade 893 ( 2004 )

Slip Op. 04-69
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: RICHARD W. GOLDBERG, SENIOR JUDGE
ABEL VALDEZ,
Plaintiff,
v. Court No. 03-00032
UNITED STATES
SECRETARY OF THE TREASURY,
Defendant.
[Denial of customs broker’s license sustained; defendant’s motion
for summary judgment granted.]
Dated: June 16, 2004
Law Office of Monica Zapata Notzon (Monica Z. Notzon) for
plaintiff Abel Valdez.
Peter D. Keisler, Assistant Attorney General, Barbara S.
Williams, Attorney in Charge, Harry A. Valetk, Civil Division,
Commercial Litigation Branch, United States Department of
Justice; Diane Galiano and James N. DeStefano, Office of
Assistant Chief Counsel, International Trade Litigation, United
States Bureau of Customs and Border Protection, Of Counsel, for
defendant United States.
OPINION
GOLDBERG, Senior Judge: This matter is before the Court on
plaintiff’s motion for summary judgment on the pleadings and
defendant’s motion for summary judgment on the administrative
record pursuant to USCIT R. 56.1(a). Plaintiff Abel Valdez
challenges the decision of the Deputy Assistant Secretary of the
Court No. 03-00032 Page 2
Department of Treasury (“Treasury” or “Secretary”) affirming the
U.S. Bureau of Customs and Border Protection’s (“Customs”) denial
of his application for a customs broker’s license.
For the reasons that follow, the Court finds that Treasury’s
decision to deny Valdez his customs broker’s license was
reasonable and supported by substantial evidence. The Court has
jurisdiction pursuant to 28 U.S.C. § 1581(g).
I. BACKGROUND
Plaintiff Abel Valdez filed his application for a customs
broker’s license on February 29, 2000. He passed the written
examination in April 2000. To obtain a license, an applicant
must also pass a background investigation. After reviewing
Valdez’s application and the results of a standard background
investigation, the Port Director at Laredo, Texas recommended
that a license be issued to Valdez in a memorandum dated May 19,
2001. See Administrative Record (“AR”), Doc. 7. Upon request by
Customs Headquarters, the Office of Investigations at Laredo re-
opened the investigation for Valdez. The basis for re-opening
the investigation was information that Valdez’s automobile had
been seized by the Drug Enforcement Administration in a currency
seizure. See AR, Doc. 8. Furthermore, Valdez’s brother was a
fugitive being sought by Customs for conspiracy to smuggle
marijuana into the United States. Customs also requested and
obtained from Valdez a copy of a Chapter 13 bankruptcy filing
Court No. 03-00032 Page 3
that Valdez had disclosed in his application, proof of discharge,
and a recent credit report. The credit report, dated July 16,
2001, listed two judgments, a state tax lien, and a dismissed
bankruptcy action.
Based on the above information, Customs denied Valdez’s
application in a letter dated January 8, 2002. See AR, Doc. 12.
Valdez appealed the denial pursuant to 19 C.F.R. § 111.17. On
July 24, 2002, Customs informed Valdez that it was unable to
approve his application upon review by the Broker Licensing
Review Board. Valdez appealed to Treasury, which upheld the
denial on November 21, 2002. Valdez timely appealed Treasury’s
decision to the Court of International Trade.
II. DISCUSSION
A. Standard of Review
The decision of the Secretary to deny a customs broker’s
license will be upheld by the Court as a matter of law unless
arbitrary, capricious, an abuse of discretion, or otherwise not
in accordance with law. See O’Quinn v. United States, 24 CIT
324, 325, 100 F. Supp. 2d 1136, 1138 (2000). Findings of fact by
the Secretary supporting a customs broker’s license denial shall
be conclusive if supported by substantial evidence. 19 U.S.C. §
1641(e)(3); see also Bell v. United States, 17 CIT 1220, 1223-25,
839 F. Supp. 874, 877-79 (1993).
Court No. 03-00032 Page 4
B. Denial of Plaintiff’s Application for a Customs Broker’s
License was Reasonable and Supported by Substantial Evidence
The Secretary has authority over matters involving customs
brokers, including issuing licenses under 19 U.S.C. § 1641(b).
The Secretary exercised his statutory authority to reject
Valdez’s appeal and sustain Customs’ denial pursuant to 19 C.F.R.
§§ 111.16(b)(1) and (3), which provide that an application for a
license may be denied for:
(1) Any cause which would justify suspension or revocation
of the license of a broker under the provisions of § 111.53;
[or]
(3) A failure to establish the business integrity and good
character of the applicant[.]
19 C.F.R. §§ 111.16(b)(1) and (3).
In its denial letter, Customs cited “several instances of
financial difficulties, including debts which were incorporated
into a Chapter 13 bankruptcy in May 1998, two judgments filed
against [Valdez] (one was satisfied), a state tax lien in the
amount of $12,599 and large overdue cellular phone bills.”
See AR, Doc. 12. As a result, Customs determined that Valdez had
failed to establish his business integrity and good character, as
required by 19 C.F.R. § 111.16(b)(3). In addition, Customs
concluded that Valdez had violated 19 C.F.R. § 111.16(b)(1) by
failing to disclose the two judgments and the tax lien against
him. Under § 111.53, referenced in § 111.16(b)(1), a broker’s
Court No. 03-00032 Page 5
license may be suspended or revoked for “omitt[ing] to state in
any application or report any material fact which was required.”
19 C.F.R. § 111.53(a).
The Secretary affirmed Customs’ decision under §
111.16(b)(3) based on the accumulation of a large amount of debt
by Valdez and his failure to meet other financial obligations.
See AR, Doc. 18. The Secretary determined that the manner in
which Valdez handled his personal finances justified Customs’
concern that he would continue to demonstrate a lack of financial
responsibility in the future.
Valdez argues that the Secretary’s decision was erroneous on
two distinct grounds. First, Valdez claims that the denial was
actually driven by “criminal concerns” – namely, the fact that
his brother is a fugitive. Although the record indicates that
Customs was concerned with Valdez’s relationship with his
brother, there is absolutely no mention of it in the Secretary’s
decision. Accordingly, the Court finds it unnecessary to engage
in further inquiry on this issue.
Second, Valdez challenges the Secretary’s reference to his
debts. Specifically, Valdez argues that the majority of the
debts belonged to his ex-wife after being awarded to her in
divorce proceedings in 1999. See AR, Doc. 15, Ex. B (Agreed
Final Divorce Decree). According to Valdez, these debts were not
his responsibility and thus the accumulation of a large amount of
Court No. 03-00032 Page 6
debt cited in the Secretary’s decision was not adequately
substantiated. As further evidence of his financial
responsibility, Valdez points to a credit report dated January
2003 showing that he has resolved debts belonging to his ex-
wife.1 Upon considering the record made before the Court, the
Court finds that the Secretary reasonably concluded that Valdez
failed to address the debts accumulated in his name in a
sufficiently thorough and timely manner, thereby demonstrating a
lack of financial responsibility. See Chang v. United States, 26
CIT __, __, Slip Op. 02-126, at 7 (Oct. 24, 2002) (“The
possibility of drawing two inconsistent conclusions from the
evidence does not prevent an administrative agency’s finding from
being supported by substantial evidence.”) (internal citation
omitted). Accordingly, the Court affirms the Secretary’s
decision that Valdez failed to establish the business integrity
and good character required by 19 C.F.R. § 111.16(b)(3).
III. CONCLUSION
For the aforementioned reasons, the Court holds that the
Secretary’s denial of plaintiff’s application for a customs
1
Valdez submitted this credit report as part of his
complaint. See AR, Doc. 20, Ex. E. As defendant correctly
notes, it was not properly presented to the Court and thus cannot
be considered by the Court. The 2003 credit report is not a part
of the administrative record, and Valdez failed to seek leave
from the Court before providing this new information as required
by 19 U.S.C. § 1641(e)(4). See Bell, 17 CIT at 1225, 839 F.
Supp. at 879.
Court No. 03-00032 Page 7
broker’s license under 19 C.F.R. § 111.16(b)(3) was reasonable
and supported by substantial evidence. Accordingly, the
Secretary’s decision is sustained.
Defendant’s motion for summary judgment on the
administrative record is granted. Plaintiff’s motion for summary
judgment on the pleadings is denied.
Judgment for defendant will be entered accordingly.
/s/ Richard W. Goldberg
_________________________________
Richard W. Goldberg
Senior Judge
Date: June 16, 2004
New York, New York